Misguided fear of collapse

The status quo is fixated on maintaining higher stock prices and inflation. People are led to believe a crash in those categories is something to fear. The real problem is the debt and currency. If we get hyperinflation then it doesn't matter what the price is, because it will be worth less than toilet paper. Those with 401k plans and IRA has the most to lose because they rely on it.

Yellen saved Wednesday from Thursday

The recent market rally was short lived after Yellen's goal post move of keeping 0% interest rate longer than anticipated. Anyone reading "Mainstream news" will notice the lack explanations from the sell-off. For the last several years, every sell-off was due to a negative event, and followed by new highs. The real question now should be, "What is not being reported?" For a long time, the talking heads touted economic recovery despite negative fundamentals. We may have reached a point where no one is buying into that fairy tale, and fiction may soon became reality. Things may get ugly really soon.

Yellen saves the day

The market rallied again on Federal Reserve Chairwoman Janet Yellen's comment on keeping 0% interest rate a little longer. For those feeling compelled to join the rally, ask yourself, why did the market sell off? Were you able to profit before it occurred? How long until Janet Yellen saves the market again?

The fact that the market needs to be saved should raise concerns on what the costs are and why are we trying to save it? Unfortunately, the costs most likely compounded to a point where civilizations are at stake.

How capitalism began and why it matters

Capitalism is an economic system in which individuals choose to engage in productions for private profits. To fully understand its benefits, one can look at history for answers.

In the 18th century of England, society was based on feudalism in which peasants serve and produce for the nobles. If man was born as a peasant, then he will remain a peasant, and if he was born rich, then he will always remain rich.

As the population of peasants increase, problems arose as nobles did not know what to do with them. They were simply outcasts and the numbers continue to grow. In addition, raw materials became scarce, and the nobles could not find a solution.

Out of the crisis, some outcasts began organizing shops to produce cheap goods not for nobility but for everyone else. This innovation marked the beginnings of capitalism; mass production satisfying the needs of the mass. The people who produced the goods are also the consumers of the goods. It is a cycle that increased living standards that did not exist before.

In today's world, people lost sight of what capitalism is, such as misunderstanding that consumers are different than the producers, when in fact they are one and the same. There is also criticism that capitalism is evil, but fail to realize that it enabled the increase of living standards and population growth. Take away capitalism and we will go back to what it was before- peasants serving nobles, and low living standards.

Unfortunately, capitalism also lost the conditions that allow it to succeed as well. Originally, producers  had the benefits of producing and consuming. Those in power interfered heavily through market regulations and taxation. This created an environment similar to peasants serving nobles, in which all the efforts of the producer were indirectly being stolen to benefit those in power.

Introduction to Supply and Demand

Supply-and-Demand is a concept to represent the amount of supply and demand for a good or service.
Its main purpose is to seek equilibrium to maximize profit. To clarify, see the graph below:

There are 4 components in the Supply-and-Demand graph: Price, Quantity, Demand, and Supply.

• The Demand curve shows that as prices falls, then quantity rises. This is true as more people will buy when prices are low.
• The Supply curve shows that as prices falls, then quantity falls. Again, more people will buy when prices are low, which will diminish the supply.
• The equilibrium is the point where both the demand and supply curve meets. It is ideally the point in which the greatest profits can be achieved. 

To better explain equilibrium, let's assume that the price of an item was set above equilibrium; the green line below.

The graph shows that supply is greater in quantity than demand. In other words, a surplus of unsold goods or services, which results in less sales.

What if price of an item was set below equilibrium; green line below.

The graph shows that demand is greater in quantity than supply. This resulted in a shortage; or lost opportunities as there were extra demand.

These are the very basics of Supply-and-Demand. In the real world, it is much more complex as things change constantly. The basic model is to help simplify how economics typically work.

The U.S. roadmap to Income Inequality and how it will end.

The pursuit of economic growth and inflation has always been part of the practice in achieving 'Income Inequality'. It was an idea conceived long ago when the U.S. Government enacted The Federal Reserve Act of 1913-The easiest way to make money is to 'make money'. 100 years later we now see the plan coming into fruition, and they sure are reaping what they sow.

For those hoping for better days, there is light at the end of the tunnel. It will be a train wrecking calamity. The following will occur in months to come:

1. Corporate profits will decline dramatically. There's a point where the lower and middle class will run out of money to support this charade.

2. Stock markets will fall accordingly from missed expectations and lower guidance.

3. Bankruptcy filings will appear in droves.

4. Government will react by saving Too-Big-To-Fail with bail-ins and bail-outs using whatever wealth that the lower and middle class still has.

5. Violence erupts in the masses. Worse case scenario is war.

There are no 'happily ever after' in this scenario as long our government continues to support the practices we have today.

Income Inequality and Wealth Transfer Simplified

Let's begin with the catchphrase, "The rich gets richer and the poor gets poorer." We all hear this at some point or another, but never really took the time to understand why. In basic economics, it is referred to as 'Income Inequality', a widening gap in wealth between the rich and poor. Today's world, it is caused by the transfer of wealth from the poor to the rich. To solve a problem such as this, we must identify the root cause by going to the fundamentals of money creation.

Money Creation via Currency

Imagine a scenario when money must first be created. First, the money printer prints $200, and gives it to 2 people. They both hold $100 each, which they both hold 50% of the money supply. The $100 bill is quite valuable as it is only 1 of 2 in the entire world. They both use it to trade for goods and services from each other.

Transfer of Wealth via Money Creation

The money printer creates $100 and gives it to Person A. This time Person A holds 2/3rd of the money supply! Suddenly, that $100 that was worth 50% is now worth 33.33%. Person B is now at a disadvantage, since he only holds 1/3rd. The creation of a $100 dilutes the value in terms of basic 'supply-and-demand'. Person A is now richer because he was the recipient of the extra $100.

Income Inequality via Transfer of Wealth

Person A sees the benefits of transferring wealth from Person B, and asks for money from the Money Printer. There is now $400 in existence, and Person A holds $300 ( 75%) of the wealth. Person B is still holding the same $100, but it is only worth 25%. By continuing to dilute the money supply, the gap in wealth continues to widen.

Real Life Scenario Comparison

The story sounds ridiculous but this is essentially what is occurring in the world. Each country has a Central Bank that creates new money and charges interest. The interest payment goes to the owners of the Central Bank. The more money the Central Bank creates, the more interest payment they get. Private Banks benefit from this as well as they are the recipient of the printed money. This is simply a wealth transfer by dilution of the money supply. Those that are able to gain easy access are the ones that benefit. A scheme such as this is only possible when government mandates it, and the people accepts it.

Real Life Solution

The only solution is to replace the current monetary system that is not inflationary by design. There are no exceptions. It is a system rigged to benefit those that are in control of the monetary system.